A reduction in the required reserve ratio has the instant effect of:
a. Increasing the monetary base.
b. Increasing total bank reserves
c. Increasing excess reserves.
d. Increasing bank shareholders' equity.
e. Decreasing bank shareholders' equity.
Question 2
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive).
b. The GDP Price Index and reserve-related (central bank) transactions remain the same.
c. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same.
d. The GDP Price Index rises, and reserve-related (central bank) transactions become more positive (or less negative).
e. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.
The greenhouse effect.
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The figure shows an LR circuit with a switch and a 240-volt battery. At the instant the switch ...